Join        Login             Stock Quote

Family Dollar Stores (FDO) Earnings Flat, Cuts Guidance Amid Margin Pressure

 January 03, 2013 07:24 AM

(By Balachander) Family Dollar Stores Inc. (NYSE: FDO) reduced its full-year forecast after the operator of self-service retail discount stores posted flat quarterly earnings amid contraction of margins due to stronger sales of lower-margin consumables.

The Matthews, North Carolina-based company also issued downbeat guidance for the second quarter, and its shares retreated 4.90 percent in premarket trading on Thursday.

Net income was nearly unchanged at about $80.3 million for the first quarter. On a per share basis, earnings increased to 69 cents from 68 cents, missing market expectations of 75 cents.

Sales rose 12.7 percent to $2.42 billion, beating market expectations of a growth of 10.80 percent. Comparable store sales gained 6.6 percent amid increase in customer traffic and higher average customer transaction value.

[Related -Family Dollar Stores, Inc. (FDO): More Headwinds Than Tailwinds In Near-Term]

Gross margin contracted to 34.1 percent from 35.3 percent in the same period of last year.

"Early results from our sales-driving initiatives exceeded our expectations in the first quarter, resulting in more gross margin pressure than anticipated," commented CEO Howard Levine. "This mix pressure, combined with expected headwinds from insurance expense, resulted in earnings that were at the low end of our guidance."

Looking ahead for the second quarter, Family Dollar forecasts EPS between $1.18 and $1.28, on comparable store sales growth in the range of 4 percent to 5 percent. Analysts expect EPS of $1.39 on sales of $2.89 billion.

[Related -Family Dollar Stores, Inc. (NYSE:FDO) Q1 Earnings Preview: What To Watch?]

"The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty," said Levine. "Discretionary categories continued to be pressured, reflecting ongoing consumer caution."

In the month of December, Family Dollar said comparable stores sales grew around 2.5 percent, helped primarily by strong, double-digit sales of consumables.

For the full year 2013, the company currently expects EPS in the range of $3.95 to $4.20, lower than prior view of $4.10 to $4.40.

Family Dollar continues to forecast comparable store sales to increase between 4 percent and 6 percent and expects pressure on gross margins mainly due to an expanding mix of lower-margin consumables.

For the preceding fourth quarter, the company earned $0.75 a share on sales of $2.36 billion.

The stock, which has been trading between $53.03 and $74.73 over the past year, closed Wednesday's regular trading at $64.04.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageGoogle: Still Opportunities Ahead

Google (GOOGL) shares are finally recovering after announcing third-quarter earnings last week that were read on...

article imageThis Technical Indicator May Be The Simplest Way To Pick Winning Stocks

What's the first rule of successful real estate investing? Of course, you just said to yourself, "location, read on...

article imageUpdate On Crude Oil Markets

Crude prices came under pressure again today. According to Reuters (from last week), the Saudis “will read on...

article imageDelta Air Lines (DAL): Panic Selling Makes This Airline Stock Ripe For A Quick Pop

If there ever were a teaching moment in the stock market, it was this week. Earnings, trendlines and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.